You are here: Home » Markets » News
Business Standard

How may Bharti Airtel and Voda Idea stocks perform in the near term?

Despite an ongoing recovery in the telecom sector, analysts believe the stock performance of Vodafone Idea and Bharti Airtel may remain sluggish in the near term. Details here

Bharti Airtel | Vodafone Idea | telecom sector

Nikita Vashisht  |  New Delhi 


Despite an on-going recovery in the telecom sector, analysts believe the stock performance of and may remain sluggish in the near-term. Their shares have cracked around 8-14% in the past three months as the benchmark Nifty50 shed 7.5%. Going forward, likely heavy investment in the upcoming 5G auction, coupled with flat subscriber growth, may act as overhangs in the near-term.

Telecom Regulatory Authority of India’s data showed that industry-wide active subscriber base dipped by 7.8 million month-on-month in April 2022. While lost 3.1 million customers, Reliance Jio lost 0.1 million, and 3.8 million. Meanwhile, the industry-wide mobile broadband subscribers remained flat at 760 million.

Analysts at JM Financial feel the broad-based active subscriber decline suggests that the November, 2021 tariff hike-led sim consolidation is not over yet. The other near-term hiccup, in terms of higher-than-preferred spectrum prices, may result in excessive capital outgo.

Pricing concern, the nascent 5G ecosystem, and evolving use cases could also make 5G rollout granular.

Rating agency ICRA pegs capital outlay of around Rs 1-1.1 trillion. Of this, the upfront payment will be 10,000 crore rupees if telcos opt for a 30-year payment plan. However, debt levels could increase with addition of deferred payment liabilities of this auction.

That said, near-term pain points are expected to be compensated by long-term growth. ICRA expects the industry to report a growth of 10-12% in its operating income in FY23, which will translate into operating profit before interest and tax expansion by 15-18%.

Industry consolidated revenues are estimated at Rs 2.6-2.7 trillion with operating profit before interest and tax of around Rs 1.2-1.3 trillion. Meanwhile, stock-specific action and global triggers will continue to dominate Wednesday’s trading session.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Wed, June 22 2022. 07:00 IST